Saturday, September 1, 2012

The great divergence

It has been ten years since Ken Pomeranz published The Great Divergence: China, Europe, and the Making of the Modern World Economy., a book that forced some real rethinking about the economic history in Europe and China. Along with Bin Wong in China Transformed: Historical Change and the Limits of European Experience, he called for a deep questioning of many of the basic premises of much twentieth century economic history, which was premised on the backwardness and stagnation of China and the dynamism of Western Europe. Industrial revolution and sustained economic growth were unique products of the west, and China was incapable of these transformations at the beginning of the modern epoch -- 1600, let us say.

So the central problematic for "European exceptionalism" was to identify some set of features of western society lacking in China that could account for takeoff. Was it merchant culture? Perhaps Newtonian science? Was it European family and reproductive behavior? Or perhaps it was some feature of Christianity?

Pomeranz doesn't like these theories. More basically, he doesn't accept the premise of European economic superiority in 1600, whether in institutions or ideology. He considers agriculture first and holds that Chinese agriculture was as productive in terms of land and labor as English farming; it was not undergoing involution through population increase; and it supported a rural standard of living that was competitive with that of Europe and England, his primary focus.

Pomeranz doesn't doubt that there were sharp differences in European and Chinese economic development in the 18th century. This is the "great divergence" to which he refers. But he doubts that there are grand socio-cultural explanations for this fact; instead he focuses on contingent conjunctival circumstances that gave England a lead that it maintained for 200 years. These include the fortuitous location of coal in Britain, the fact of New World wealth, and the returns if slave labor in North America. None of these is a deep systemic factor but rather a lucky break for Britain.

Bin Wong adds a different theme to the debate. He recognizes that Europe and China possessed complex political-economic systems that were different from each other. And he agrees that these systems had consequences for development. But he agrees with Pomeranz that neither system is inherently superior. And he calls for an economic history that pays attention to the differences as well as similarities. Each process of development can be illuminated by comparison to the other.

So where is the debate today? This was the focus of a productive conference at Tsinghua University in Beijing last week. Some of the primary contributors to economic history participated, including Robert Allen, Bozhong Li, and James Lee. It isn't possible to summarize the papers, but several themes emerged. The most basic is the need to bring substantially more factual detail to the debate. What we need at this point isn't more theorizing about large causes; it is more fine grained factual discovery across both Europe and China.

Three areas in particular have gotten much more factual in the debate in ten years. the first is agricultural productivity. Historians like Robert Allen and Bozhong Li have substantially sharpened our knowledge of the farm economies of England and China.

Second is the question of the historical standard of living in various places. Essentially this depends on price data, wage data, and a system for comparing consumption across countries. Here too there has been a great refinement of our knowledge. Robert Allen has contributed much of this.

Third is population behavior. The Malthusian theory of the difference between China and Europe is a stumbling block, and of course this theory was created in a fact-free universe. Now comparative historical demography has advanced a long way thanks to researchers like James Lee. The Eurasian Population and Family History Project has now refuted the Malthusian view.

A key idea in the Pomeranz debate is Philip Huang's idea that Chinese agriculture was "involutionary". The work provided by Bozhong Li demonstrates that this theory is simply incorrect when applied to the lower Yangzi River delta. Moreover, China's development after 1970 makes the theory implausible in any case. As Li pointed out at the conference, "It is inconceivable China's modern development could have occurred in the conditions of involution described in the debate." China was clearly not caught in an inescapable involutionary trap.

So there is work to be done still on the origins of the great transformation. And it is valuable for this work to take place with a global and comparative perspective. But most valuable will be detailed factual research that adds significantly to what we know about the past.


McFreeWill said...

One over looked role in the development of capitalism is the accumulation of capital during the 2 centuries leading up to the 1800's. particularly in England. The role of forcing peasants into a day labor class by means of enclosure of the commons, more efficient farming methods and advances in technology.
This set the preconditions of an industrial society flush with cheap labor without this labor the advancement of Englands global reach could not be sustained despite her coal deposits.

Richard H. Serlin said...

One of the most surprisingly fascinating books is, "The Future for Investors" (2005), by famed University of Pennsylvania, Wharton, finance professor Jeremy Siegel. In it he talks about the great importance for the advancement of mankind of preservability and accessibility of information, and this regards, fascinatingly, China (this will be very surprising and contradict much of what's in your post above):

Until the onset of the industrial revolution, productivity and population growth inched ahead extremely slowly. In fact, productivity backtracked as often as it moved forward. Discoveries and inventions were made, but many were lost to the next generation. For example Rome of A.D. 100 is said to have had a better infrastructure (roads, sewage systems, and water distribution) than many European cities of the 1800s. (page 207)

"...for a period of seven or eight centuries, Chinese civilization was by most standards the most advanced on Earth [quoting Michael Hart]" China's dominance was clearly facilitated by its ability to record and transmit information [the Chinese invented paper]. (page 209)


"The Ming rulers rejected anything that disturbed the status quo...many books of knowledge vanished during the Ming Dynasty...Charles Jones, an economics professor at Stanford University, wrote, "China came within a hair's breadth of industrializing in the 14th century, yet in 1600 their technological backwardness was apparent to most visitors; by the 19th century the Chinese themselves found it intolerable" (pages 209-10)

Politics was enormous – this shows the great power that good democracy can have.

JSeydl said...

It is an interesting question. Robert Gordon's recent paper on the future of growth gives a detailed account of the various technological breakthroughs that made explosive growth possible in Britain and the US in the centuries following 1700. The question is, why didn't the far east benefit from those same breakthroughs? The answer is probably in Why Nations Fail. Institutions matter, and the institutions in the west were likely more inclusive than those in the east. Strong patent and copyright laws probably helped, as did a greater emphasis on education in the west. Of course, natural resource deposits probably also played a role.

Going forward, though, what I think is even more interesting is the relative institutional differences between the west and the east today. One reason why growth is slowing in the west might be because those same institutions that paved the way for growth have changed. Patent laws are now perhaps too restrictive, for example. Will be interesting to see how things play out.

Mike Zeddies said...

Blogger seems to have swallowed my previous comments, so I'll attempt to reconstruct:

Surely the real question here is: why did capitalism arise at all, and why did it arise in Europe?

I know some dispute the notion that European colonization and exploitation of the New World was unique, but capitalism is based on exploitation of marginal advantages, after all, so perhaps there is something unusual about the European siphoning of resources from the New World. But would they have made any difference without certain socioeconomic changes on the European continent?

I'm also interested in the apparent flow of capital from Spain, through the Netherlands, to Britain. Could British capitalism have occurred without the Spanish/Hapsburg empire? Surely there is scholarship in this area. There seems to be some sort of strange synergy in general between the Catholic exploiters of New World resources, and the Protestant proto-bourgeoisie of the European continent. Perhaps the Peace of Augsburg and that of Westphalia are peculiarly modern and European phenomena?

It seems possible to me that Europe just accidentally stumbled on just the right ("right" in the sense of "powerful") balance of macro power (Latin, the concept of "Christendom", etc.), meso power (the nation-state, the company, the merchant prince, etc.), and micro-power (the pietist Christian household, the printing-press, the academy, etc.). But this is just a thought.

This Catholic-Protestant synergy may, curiously, lie behind the modern and European concepts of capital, the capitalist, and the company, which together form an authority ultimately independent of land, people, culture, or traditional sovereign power. Although abetted, supported, and encouraged by government, it nevertheless remains aloof from traditional sources of power (the military, the aristocracy, religion, etc.) and always seems capable of escaping their attempts to usurp it, relying as it does on a kind of amorphous (or polymorphous) form that seems (though may not actually be) novel in its definition.

In a way, in some ways it's perfect for mediating between warring religious factions that are nevertheless committed to a truce (just as science was perfect for mediating between the intelligentsia of these factions).

Anyway, my original post was better-written, but the question is: what makes early capitalism, specifically (of the 16th-17th centuries, let's say) unique? Was it really so unique? I don't know enough about Chinese economic history to say it was unique, after all.

Well, those are some half-formed thoughts, anyway. My apologies if they are in any way deficient.